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Jun 16, 2015

After a lengthy delay since it was “announced” last year, the much-ballyhooed China-Australia Free Trade Agreement will finally be signed tomorrow. Like the South Korean and Japanese free-trade deals that preceded it last year, the government will talk this new deal into the stratosphere. Meanwhile, the reality will be somewhat more sobering as foreign countries start pulling back from China’s slowing economy. Timing, or what?

While the Abbott government appears to be have been caught red-handed supporting precisely the wrong business in Asia — that of people smuggling — big-name Australian companies have been generally hopeless, with a handful of honourable exceptions in Toll Holdings (now part of Japan Post), ANZ, BlueScope and Macquarie making significant pushes into Asia.

Comfortable oligopoly positions in many industries (retail, telecoms, energy), a general fear of Asia’s “differentness”, insular boards (reflecting the nation itself) and flaccid government policy are among the key reasons holding our companies back.

And then there are the cautionary tales: Foster’s disastrous foray into China, Leighton’s mismanagement and Telstra’s serial failures (the company is, once more, bravely forecasting that hope will triumph over experience as it tries again in Asia). There’s an increasing likelihood that there’s a new one to add to this list, with SMEC — once known by its full name, the Snowy Mountains Electricity Corporation — at the centre of an increasingly high-profile political dispute in Myanmar.

SMEC’s website boasts that the company has “delivered thousands of civil, transport, water, environment and power projects in over 100 countries, and has contributed to national development in some of the world’s fastest growing and established economies. SMEC applies passion, innovation and expertise to deliver outstanding outcomes to the global divisions and sectors in which the Company operates.”

But according to reports from environmental and rights groups, SMEC appears to be hand-in-glove with the developers accused of bribing villagers in a dam project that promised to be the region’s largest, which ended up flooding an area the size of Singapore and displacing 100 communities.

The issue of under-the-table payments in Asia — seen by the Asians as part and parcel of doing business but by the West, which has sanitised the process via lobbyists, consultants and investment banks, as a complete no-no — has been a particular stumbling block, but every now and then (think AWB) a company gets sprung. Not that Crikey is saying that the accusations against SMEC are anything but allegations.

Hydro-electric power is one of the most controversial environment versus economics tussles in the region. The latest of a string of controversies centre around the Mong Ton project, which will affect the three major river systems that wend their way from the Himalayas down through south-east Asia — the Mekong, Irrawaddy and Salween rivers. The Mong Ton project will build Asia’s highest dam on the Salween River in Myanmar’s northern Shan state, which borders China, Laos and Thailand. The stakes are huge.

The US$6 billion project is due to be 231 metres high and will run two-thirds the length of Shan state, effectively bisecting much of the state, which has been riven by civil war for decades. It will provide 7000 megawatts of power. And like many dam projects in the region’s poorest countries, Myanmar and Laos, the power will be sold off to wealthier neighbours — in this case China and Thailand.

SMEC won the contract to carry out social and environmental impact assessments (SIAs and EIAs) for the project. If they are true, allegations levelled against SMEC by local villagers and reported in SHAN News are, at the very least, highly disturbing.

“Local residents from Mel-Kin and Mauk-Salee villages were given a packet of snacks and a shoulder bag, they were then forced to sign [a document that gave] their approval. Because the company told villagers they must sign they signed. The company did not properly explain the project to villagers so they did not understand about the project.” Sai Sai from Hway-Aot village told the media outlet.

SMEC also stands accused of not visiting several sites that would be affected by the project, lying about the negative affects of the projects to locals and refusing to answer questions by people who will be affected.

On April 21 and 22 this year, Australian Federal Police raided SMEC offices in Cooma, NSW, in relations to bribery allegations, but there has been no confirmation whether the Myanmar dam project was part of the swoop.

‘”The AFP conducted a search warrant in Cooma this week as part of an ongoing investigation into allegations of foreign bribery,” an AFP spokesperson told the Cooma Express. All this could portend an ignominious end for SMEC’s Asia strategy.

On June 9, at the Foreign Correspondents’ Club of Thailand, 16 Shan state NGOs banded together to issue a statement:

“It is becoming apparent that SMEC’s EIA/SIA process is simply a sham, aimed to rubber-stamp the Mong Ton dam plans, rather than objectively assess the project’s actual impacts. Despite promising to hold ‘comprehensive’ public consultations in impacted townships, SMEC has since last month cancelled all public consultations at the township level, instead only holding closed-door meetings with government officials, for example in Loilem and Tachilek. This appears to be a deliberate strategy to avoid facing community protests against the dam.”

It’s hardly a great advertisement for the company or Australian business, which, as usual has by and large been slow to grasp the huge potential in Myanmar and ceded early mover advantage to the Asian and European nations. It would be terrific if SMEC could explain what’s going on and respond to the allegations so it doesn’t cruel the reputation of Australian companies in the market, because the way China is going politically, economically and strategically, the opportunities might be better elsewhere.

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One thought on “Orient express: is a big Aussie company greasing palms to get ahead in Asia?

  1. old greybeard

    Any agreement with China is bullshit. There is no way to enforce any rules, as the rule of law does not exist in China. It no longer exists here, but that is another matter. I read a few days ago of David Blackmore finding a Chinese company labelling meat with his wagyu brand and selling it to restaurants. It was discovered, right down to the supplier. The Australian and Chinese governments took no action whatsoever.